Retiring? Five things that make your practice worth money (Part One)
Back in 2017 (thereabouts), we sat down with the Director of corporate development for MDVIP to discuss the challenges and opportunities available to Physicians considering retirement. Specifically, how to exit well and and leave your practice (and your wallet) in good hands. Here’s some of those FAQs that we pulled from the “archives” of Concierge Medicine Today. We hope you’ll find these helpful and educational.
“If you are thinking about retiring from your concierge medical practice, know this: your exit strategy requires just as much planning as it took to build your thriving patient base. A top concern is finding quality continuity of care for your members. Another real challenge is selling your practice.”
By T.S., Director of corporate development for MDVIP (circa 2017). Learn more, visit: www.MDVIP.com
Many primary care doctors today — including concierge physicians — enter retirement with practices that are worth very little. I know this because I lead an experienced team responsible for identifying, analyzing, negotiating and buying independent, retainer-based practices. In the past two years alone, we’ve assisted 58 physicians like you with monetizing their practices and transitioning their patients to an excellent doctor who delivers highly personalized care.
Part One
Here are five things we’ve learned that add value to practices like yours:
Consistent Revenue Growth (for the past three years) — This indicates positive patient satisfaction and retention, and likely an increase in your membership. A shrinking patient panel is a warning sign that a physician may be slowing down and is not as engaged in maintaining and growing the practice. Healthy practices make for healthy investments, which is why revenue trends factor into our evaluation.
Stable, Modest Overhead — Typical overhead for a solo concierge practice may run anywhere from $225k-$300k, depending on the number of patients and location. A two-physician group could have overhead around $325k-$400k. Overhead generally should not exceed 50 percent of total revenues. If yours does, look for expenses to reduce. Moderate overhead increases of three to five percent are normal.
Market Longevity — Practice longevity shows stability, experience and a commitment to your patients. Time-honored roots in a community are also important. We have found that the longer patients are in your concierge practice, the more likely they are to remain. Once patients enjoy a higher level of service and personalized attention, they usually do not want to go back to a traditional, volume-based practice.
Seasoned Staff — Staff are critical to patients’ perception of the care you deliver. They can either be a practice asset or liability. Friendly, compassionate, skilled employees who deliver a patient-centered office experience are invaluable to your practice. Staff size in most concierge practices of 600 or fewer patients is two to four full-time employees.
Focus on Wellness and Prevention — The most successful concierge medical practices provide highly individualized, proactive care and service focused on wellness, prevention and early detection, as well as offering conveniences like timely appointments and physician availability during and after hours.
As you contemplate your future and your patients’ futures, it’s never too early to start planning for retirement and exploring your options. Selling your practice can help you realize the value of your life’s work and give you peace of mind – personally, professionally and financially.
Source/Credit; By T.S., Director of corporate development for MDVIP (circa 2017). Learn more, visit: www.MDVIP.com